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Case Against Chairman of Banco Santander Is Dropped

MADRID — Spain’s national court on Tuesday closed a tax fraud investigation focusing on Emilio Botín, the chairman of Banco Santander, and 11 of his relatives.

The court said the case was abandoned, without any charges being brought, because the Botín family had straightened out its tax problems before June 2011, when the investigation was announced. At the time, people close to the family said the Botíns had already paid about 200 million euros (about $288 million based on the exchange rate at that time) in back taxes.

Lawyers from Uría Menéndez, a Madrid law firm representing the Botín family, said they welcomed the court decision.

“The full dismissal of this case by the national high court judge, at the request of the public prosecutor and the state attorney, confirm what we said when the case was opened in June 2011: that the family had voluntarily and completely regularized its tax obligations, which were and are all up to date,” the lawyers said in a statement.

Still, the announcement in June that Mr. Botín was the subject of a tax evasion investigation was a shock to Spain’s already fragile banking sector. The national tax agency’s inquiry was based on a list of undeclared Swiss bank accounts sent to the Spanish authorities by their French counterparts. The list was handed over to France by a former information technology expert at HSBC.

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Emilio Botín, chairman of Banco Santander, Spain’s largest bank, and 11 relatives paid $288 million to settle back taxes.Credit...Nacho Cubero/Reuters

The Botín family’s dealings with HSBC dated to 1937, when Mr. Botín’s father, who was also named Emilio, left Spain after the start of the Spanish Civil War and opened an account in Switzerland. He died in 1993, but the Botíns’ lawyers said his son and other heirs found out about the secret bank account only two years ago, when the list of HSBC account holders came to light.

Mr. Botín took the helm of Banco Santander in 1986, making him one of the country’s longest-serving banking chairmen. His stature in Spain is such that his rare pronouncements on the economy often eclipse those of politicians.

Over the last two decades, Mr. Botín transformed Santander into Europe’s largest bank by market value, with significant investments in Brazil, the United States and Britain. That diversification has helped Santander weather the collapse of Spain’s real estate market better than most of its rivals — in particular savings banks whose exposure to rising mortgage defaults has fueled concerns that Spain might need international assistance to keep its banking sector afloat. This month, Spain partially nationalized Bankia, the country’s largest real estate lender.

The tax fraud investigation into the Botín family came at an awkward time for Santander because of a separate court case involving Alfredo Sáenz, the bank’s chief executive and Mr. Botín’s second in command, who was found guilty of making false claims in the 1990s against debtors of Banesto, a troubled bank that was eventually taken over by Santander.

The ruling included a ban from banking, but Mr. Sáenz eventually received an official pardon from the previous Socialist government in November, in what was one of the final decisions made by José Luis Rodríguez Zapatero, then the prime minister, just days after he lost a general election to Mariano Rajoy and his conservative Popular Party.

The issue of offshore accounts came back to the forefront in March, when Mr. Rajoy’s government announced a partial tax amnesty designed to bring to the surface about 25 billion euros in revenue hidden in the underground economy and in offshore financial centers. The repatriated money will be taxed at 10 percent, the government said.

A correction was made on 
May 22, 2012

An earlier version of this article misstated when Mr. Zapatero pardoned Mr. Sáenz. It was after he lost the general election, not before. (He was in office for another three weeks.)

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A version of this article appears in print on  , Section B, Page 5 of the New York edition with the headline: Case Against Chairman of Banco Santander Is Dropped. Order Reprints | Today’s Paper | Subscribe

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